Asian equities close mixed as geopolitics take a backseat

4:27 pm April 18, 2017| Last Modified: 4:27 pm April 18, 2017

Photo: BBC

Tokyo, Japan (BBN) – Asian shares were mixed in Tuesday trade as geopolitical tensions took a backseat following a failed missile test by North Korea at the weekend and as U.S. Vice President Mike Pence continues his tour of Asia.
Pence met with Japanese Prime Minister Shinzo Abe on the second leg of his tour of the region, where he said the U.S. would work with its allies in dealing with North Korea, reports cnbc.com.
The Nikkei 225 rose by 0.35 percent or 63.33 points to close at 18,418.59, as the dollar gained against the yen after trading at a five-month low in the last session. The dollar/yen traded at 109.02, off the lows around the 108 level seen in the previous session.
Major Japanese bank stocks made gains, trading higher by more than 2 percent across the board earlier in the session. Mizuho Financial led gains in the sector and ended trade higher by 1.1 percent to close at 191.1 yen a stock.
The Kospi inched up 0.13 percent or 2.7 points to close at 2,148.46. Tech stocks were among the best performers, with chip manufacturer SK Hynix trading higher by 2.03 percent to finish the session at 50,200 won a stock. Defense stocks also made gains, with Korea Aerospace surging 5.79 percent to close at 60,300 won a stock.
U.S. Vice President Pence visited the demilitarized zone (DMZ) inSouth Korea on Monday, where he noted that “all options (were) on the table” when it came to Pyongyang.
“One suspects the concerns in North Korea has further to play out … With this in mind, there will be a strong focus on next week’s meeting between the Russians, the U.S. and the United Nations to discuss Syria and North Korea, although a week seems a long time in markets,” IG Chief Market Strategist Chris Weston said in a Tuesday note.
In other South Korean news, former President Park Geun-hye was indicted for briberyyesterday.
Australia’s benchmark ASX 200 index fell 0.9 percent or 53.25 points to close at 5,836.7, as Australian markets opened after the long Easter weekend. Major miners finished notably lower, with Fortescue Metals closing 7.45 percent down at $5.09 a stock.
Mainland Chinese markets were lower, with the Shanghai Composite falling 0.79 percent or 25.5671 points to close at 3,196.6002 and the Shenzhen Composite reversing earlier gains to drop 0.619 percent or 12.131 points to finish at 1,946.4209. Hong Kong’s Hang Seng Index dropped 1.13 percent.
Housing prices in China rose 0.6 percent in March from February despite government curbs, according to Reuters. Property stocks were lower on the mainland but mixed in Hong Kong markets.
Meanwhile, Ant Financial upped its offer for MoneyGram International after a rival offer was made by Euronet Worldwide. Ant’s revised offer stands at $18 per share, totaling $1.2 billion.
The board of MoneyGram has approved the offer but the deal will first need to be cleared by the Committee on Foreign Investment (CFIUS).
In currency markets, the dollar traded lower for a fourth straight session against a basket of rivals at 100.29 at 2:30 pm HK/SIN, compared to the 100.4 handle seen yesterday.
The Australian dollar was weaker at $0.7554, off the $.076 handle seen at the beginning of this month. The Korean won traded near a one-week low, with the dollar fetching 1,141.95 won.
This followed U.S. Treasury Secretary Steven Mnuchin’s comments to the Financial Times on President Donald Trump’s remarks on the strength of the dollar. Mnuchin said that there was a “difference between talk and action.”
“The comments coming out of Trump, Mnuchin, the whole administration are ultimately a sideshow. The bigger drivers for the dollar are what the Fed is going to do and what interest rates are doing.
The decline in interest rates, especially since the rate hike in March, has been probably the biggest weight on the dollar’s performance,” Standard Chartered Head of FX Research Eric Robertsen told CNBC’s “Capital Connection.”
“We had a rate hike in March. The Fed leaves its forecasts in place … And yet, since then, short term interest rates have declined anywhere from 40 to 60 basis points, 10-year yields have declined, interest rate forwards have all declined. The whole term structure of rates has come down.”
Oil prices were lower after a report that said U.S. shale production is expected to rise. Brent crude was lower by 0.09 percent at $55.31 per barrel and U.S. West Texas Intermediate (WTI) crude was 0.13 percent down to trade at $52.58.
Shares posted a higher finish on Wall Street, with the major U.S. indexes all up by more than 0.8 percent.
Investors are expected to eye earnings season, with Bank of America, Goldman Sachs and IBM among the big names reporting this week.BBN/SS/ANS

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